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Dismukes Testifies before House Committee on Natural Resources

David Dismukes, associate executive director and professor for the Center for Energy Studies, testified June 30 at a congressional hearing before the U.S. House of Representatives Committee on Natural Resources. The hearing was held to discuss proposed amendments to H.R. 3534, the “Consolidated Land, Energy, and Aquatic Resources (CLEAR) Act of 2009.” The CLEAR Act, sponsored by Rep. Nick Rahall, II (D-WV.), was designed to consolidate the administration of federal energy minerals management and leasing programs into one entity, the Office of Federal Energy and Minerals Leasing of the Department of the Interior. Amendments to the CLEAR Act would to change offshore energy regulatory policies in the aftermath of the Deepwater Horizon incident.

Dismukes testified that the proposed changes include a number of positive provisions:
• allocation of the planning, leasing, and inspection functions of the former Minerals Management Service, or MMS, into three new bureaus, which would remove the conflicts of interest that were perceived to be inherent within the old MMS regulatory and governance structure;
• a plan for buttressing each of the new regulatory agencies’ professional staff, allowing them to recruit and retain the best available talent in the market within specialized skill areas;
• establishment of benchmarks and performance metrics to evaluate operator success at meeting environmental and safety standards.

Dismukes warned that, in developing these provisions, Congress could be missing a unique opportunity to create a performance-based regulatory structure that would establish a symmetrical system of penalties and rewards. Such a reward system could lead to both improved offshore environmental and safety concerns and private sector research in technologies that could lead to profitable and environmentally positive outcomes.

Provisions Dismukes identified as having potential negative impacts for Louisiana include
• removal of the offshore Gulf of Mexico, GOM, deep gas drilling and deepwater drilling incentives, which would result in job losses for a large number of oil and gas employees. Currently, more than 250,000 people are directly employed in oil and gas related activities along the GOM states, more than 100,000 of whom live and work along the coastal parishes and counties of the Gulf.
• failure to address a long-standing inequity in the mineral revenue process. Despite the contributions of Louisiana and other GOM states to U.S. energy production, transportation, and refining, these states have received few to no bonuses, rentals, or royalties created by these efforts, which take place near our shorelines. Instead of remedying this inequity, the proposed bill would allocate 10 percent of the annual federal mineral revenue from offshore production into a number of competitive grant programs that would be available to all coastal states regardless of their historic or current energy production contributions.

Dismukes recommended including revenue sharing provisions for the states that are actively supporting offshore energy production activities, both fossil fuel or renewable based.